This is what ace investor Rakesh Jhunjhunwala was busy with; found love in SpiceJet, Fortis Healthcare, more
Many idolize Rakesh Jhunjhunwala when it comes to reap real benefits from markets and the way the equity king has invested it is definitely exciting to watch.
Rakesh Jhunjhunwala has been surfing equities for years and creating money making magic for decades. This is despite the fact that it is no mystery that Indian markets are sentiment driven and extremely volatile. When the thought of investing in equities comes in most investors minds, the first few words that zoom into his or her consciousness are 'risky', 'not guaranteed returns' and even 'shock'. There is a reason behind it and that is uncertainty, the latest example of which was visible in recent days. The July - September 2018 quarter has been not so good for Indian equities, with Sensex cracking below 34,000-mark and Nifty 50 tumbling below 10,200-level. It has been heart-breaking and investors minds are at their wits end when it came to creating an investment plan for equities. When it comes to investing in stock exchanges, an investor must be capable enough to master patience and work against even 'human nature'.
Interestingly, in this very challenging scenario, ace investor Rakesh Jhunjhunwala has been busy this quarter. He made many key changes in his stock portfolio, by reducing some of his holding and making new purchases and also increasing shares in favorite stocks. Many idolize Rakesh Jhunjhunwala when it comes to reap the real benefit of markets, and the way the equity king has invested it definitely exciting to watch.
Surprisingly, Jhunjhunwala has made new investments by the end of September 2018 quarter, it has been revealed. And tellingly, he has found new love in pharma service provider Fortis Healthcare and low-cost carrier SpiceJet.
He has purchased about 2.41% in Fortis Healthcare which accumulated to 12,500,000 equity shares worth Rs 164.1 crore.
Meanwhile, in SpiceJet, the investor has bought 7,500,000 equity shares which are worth Rs 54 crore. With this, Jhunjhunwala’s holding stands at 1.25% in the airline.
While, Jhunjhunwala added new companies for change in his long-holding portfolio, he even increased few stakes in six favorite stocks.
Guess what! Jhunjhunwala has bought about 0.43% extra in NBFC-giant Dewan Housing Finance Limited. Now his holding stands at 3.19% in DHFL from previous 2.76%. He has now 1 crore shares in the company, which are worth Rs 188.4 crore.
What is interesting is that, Jhunjhunwala has looked to make the most of the situation that the beleaguered DHFL is in - it has been dumped by investors! In September month alone, DHFL stock price had more than halved to Rs 275 per piece down by 59.40% from its Rs 678 per piece mark in the beginning of that month itself.
Everything seemed bleak when it came to trading in DHFL stock price since the time rumours emerged on defaulting in bonds or repayment in financial obligations. It's not that the company hasn't tried its best to convince investors.
In fact today, DHFL touched an all-time low of Rs 179 per piece in trading session, however, managed to rebound its losses and was trading at Rs 194.45 per piece up 2.34% on Sensex.
Despite the rumours and distress, DHFL is still seen as money making stock for Jhunjhunwala, as analysts are optimistic on the company.
Earlier, Keerthi S analysts at Chola Securities said, "We expect stock to recover, if 2QFY19 results are in line with management’s guidance. Healthy growth in loan book, improving cost of funds on account of change in borrowing mix, improving cost efficiency and stable asset quality paints a positive picture for DHFL, hence we maintain BUY rating and maintain the target price at Rs 743, assigning a P/ABV 2.1X of FY20E.”
Going ahead, TV18 was the second company where Jhunjhunwala made heavy investment. He had increased his holding in TV18 by 0.37% to 2.97% from previous 2.60%. He now holds about 50,810,000 equity shares worth Rs 184.2 crore.
Similarly, Jhunjhunwala increased 0.31% in Jubilant Life Science to 1.57% from previous 1.26%. He now has about 2,500,000 equity shares in Jubilant worth Rs 162.5 crore.
On Jubilant, broking firm IIFL said, “ We forecast revenue and adj. PAT CAGR of 15.7% and 18.4% respectively over FY18-20E, with ~70bps EBITDA margin expansion. We recommend BUY with target price of `851 (SOTP).”
Surprisingly, Jhunjhunwala made gradual rise in investment under his favorite stock Titan Company who is also the highest return provider for the investor.
In Titan, Jhunjhunwala has increased his holding by 0.06% to 7.12% from previous 7.06%. He now has about 63,251,220 equity shares in the jewellerymaker worth Rs 4,900.7 crore.
Titan is the same stock were Jhunjhunwala sold about 1.4% stake from April - June 2018. taking his overall holding down to 7.06% from previous 8.46%.
However, Jhunjhunwala has boldly reiterated that he still believes in the jewelry maker and is extremely bullish on its stock.
Recently, government’s import duty hike has created a cause of concern among investors on whether to invest in Titan stock ahead or no. Even though the government did not make any increase in gold custom duty, however, diamond jewelry and gems underwent a certain hike.
Despite the ongoing stress on Titan when it comes to the impact of import duty, analysts believe that the company is better placed and has potential to grow furthermore.
Analysts at Motilal Oswal said, “Sharply increased exchange sales (at 43% of sales v/s 15% in 2013) insulate TTAN (relative to peers) from any adverse impact of gold import curbs. This, in fact, places the company well to eat into the share of peers amid a volatile gold price environment.
Motilal values the stock at 47x Sep’20 EPS (~10% premium to three-year average) to arrive at a TP of INR1,070. Reiterate Buy.
Looks like Jhunjhunwala has already predicted Titan’s glory ahead, and has decided not to lose any opportunity in making some money.
Furthermore, Jhunjhunwala also raised his holding by 0.04% and 0.02% in Escorts and Federal Bank.
The Dalal Street king now holds about 8.16% in Escorts with 10,000,000 equity shares worth Rs 573.4 crore. Earlier, he had held about 8.12% in Escorts. Whereas, he holds about 1.74% in Federal Bank with 33,971,060 equity shares worth Rs 271.1 crore. By end of June 2018 quarter, Jhunjhunwala has about 1.72% in Federal.
Escort share price is seen to gain further. Analysts at Way2Weath said, “At CMP of Rs 597, Escorts is currently trading at a FY20E PE and EV/EBITDA of 10.1x (adjusted for treasury stock) and 8.5 respectively. We value Escorts at Rs 807 per share by applying 13.7x P/E (10% discount to average P/E of 15.2 of all other auto OEM’s) to its consolidated FY20E EPS of Rs 59.”
Also Federal Bank is seen as money making magnet, as analysts at Anand Rathi said, “With advances/deposits/PPOP growing 25%/22%/20%, Federal Bank reported a stable quarter. Slippages were contained below 2% despite business disruption due to floods in Kerala. We expect the strong momentum in its balance sheet to persist, with a gradual decline in its credit cost boosting profitability in the medium term. We retain a Buy.”
Anand Rathi sees Federal Bank share price to rise by Rs 105 per piece.
Considering the above investment move made by Jhunjhunwala, one thing can be believed that there is no stopping this investor!
Among many investment mantras in equities by Jhunjhunwala, a few that really stand out includes this one: “Respect the market. Have an open mind. Know what to stake. Know when to take a loss. Be responsible.” The Warren Buffett of India also believes growth comes in ''chaos''.